China's economy expanded by 7.4% in the first quarter of the year, better than what many were expecting.

But it is a slowdown from 7.7% growth in the final quarter of last year.

Other data released with the gross domestic product (GDP) figure showed industrial output rising 8.8% in March from one year ago.

Retail sales for the month of March spiked by 12.2%, underscoring China's efforts to boost economic growth via domestic consumption.

Last year China set its growth target for 2014 at 7.5%, part of efforts to stabilise the economy after years of fast-paced expansion.

China's growth data is closely watched around the region. A slowdown could hurt Asian economies especially those which export commodities and industrial components to the world's second largest economy.

Quality vs Quantity

Martin PatienceBBC News, Beijing

China's Premier, Li Keqiang, is trying to downplay the fixation on GDP figures in the world's second largest economy. He's now stressing that the quality, rather than the quantity, of growth is what is important.

China's leaders have said they will tolerate slower growth while they push through major economic reforms which are designed to create new, better-paying jobs. There is the realisation that the old economic model, dependent upon investment-led growth and exports, has now run out of steam.

The leadership wants to see more domestic consumption to create more sustainable growth over the long-term. It wants the private sector to play a bigger role. But in any economic shake-up, there will be winners and losers.

Implementing the reforms will mean tackling entrenched economic interests - such as state-owned enterprises - that have gobbled up resources and done very well out of the old way of doing things.

In recent weeks, the government has announced a mini-stimulus to prop up flagging growth. But it has ruled out the type of the massive stimulus which jolted China's economy back to life following the global financial crisis.

Despite the challenges, the governments hopes to post growth of around 7.5% for this year.

A sluggish start for the year is not uncommon, due to the Lunar New Year holiday when many businesses and factories shut down operations for about two weeks.

But recent data from the manufacturing as well as industrial sectors have been weak, raising fears of a prolonged slowdown.

Economic boosters

Amid these concerns, China has recently taken more steps to give a jolt to its economy.

A mini-stimulus measure announced earlier this month will see Beijing extending a tax break for small and medium-sized companies, and ramping up spending on China's railway infrastructure.

In addition, the mainland also took steps to open up its capital markets by announcing a tie-up with Hong Kong, allowing for cross-border stock investment. The pilot scheme is scheduled to take off in about six months.

And in January, China launched a free-trade zone in Shanghai, seen as a test bed for reforms in key areas of the economy, such as the financial and telecom sectors which previously were tightly controlled by the government.

China also said it will allow foreign firms to make gaming consoles within the free-trade zone and sell them across China - lifting a ban on gaming consoles which had been in place since 2000.

China doubled the daily trading band for its currency this year to 2%

Bottoming out?

Analysts are hopeful that the Chinese economy has bottomed out, and will perform better later in the year.

Julian Evans-Pritchard from Capital Economics said: ``Chinese growth held up better than expected last quarter and there are signs that downwards pressure on growth has eased somewhat.''

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"While Q1 GDP growth slowed, we believe that the growth momentum has stabilised in March. Port throughput data and our field study also suggest that China's trade may have bottomed out, and will become more resilient than what the current headline numbers suggest," said Zhou Hao who covers the Chinese economy for ANZ in Shanghai.

China's trade figures for March had shown a sharp drop in both imports and exports.

Earlier this month the World Bank lowered its growth forecast for the Chinese economy this year to 7.6% for this year from a previous prediction of 7.7%.

Comment number 158.

Emperor Wibble16th April 2014 - 16:35

156. I think you'll find Einstein, Martin Luther King, Hawking, and Attenborough amongst others are being proved right.---Aah yes, because being expert in one field makes you an expert in everything? I'll invite Dan Mackenzie round to whip my appendix out.Malthus was wrong in 1798, and since then living standards have _improved_, not deteriorated.

Comment number 157.

Freddy16th April 2014 - 16:08

@ 96. Jurist: I disagree - the EU has far more potential than China. It already is the biggest economy, even during these hard times, so imagine what they will be like once the economic recovery is complete.

Comment number 156.

Comment number 155.

John16th April 2014 - 15:43

The BBC has this story as upbeat, yet other financial press are very disappointed. They say it shows a continuing decline of manufacturing and brings China much closer to the knife edge. Recent imports dropped rapidly, showing they know there is less demand for their finished products. China's crunch time edges slowly closer!

Comment number 152.

Emperor Wibble16th April 2014 - 15:01

127.independent However I think that the federation of US states have collectively more in common than the wide cultural disparity of the 28 countries that currently make up the EU.---USA is split politically with the coastal states being largely Democrats and the central states mostly Republican. The vitriol with which the two ideologies treat each other is _less_ cohesive than the EU.

Comment number 150.

squirrel16th April 2014 - 14:39

Who cares what china does?Occupy the West of its 'territory', invade Tibet..just like Russia, unless you 'object' via Trade they'll never listen. They're fueled by cheap labour, and as they're trying to improve wages, they'll face what Japan, Korea and Taiwan did. Their Miraculous Growth will move elsewhere where life is cheaper. Globalists like easy money and bigger profit margins, not Countries.

Comment number 149.

jeffa444416th April 2014 - 14:37

China has trade barriers, we dont. China has virtually no labour laws, we do, China is openning new coal fired power stations, were closing them and the pits producing coal, China it seems is looking after China, Britain it seems is on a continuos spiral of selling the family silver.

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